The nation's top consumer watchdog agency has opened an inquiry into the multi-million dollar deals between American universities and big banks for recruiting students to open checking accounts that critics say may be saddled with extra fees.
"Unfortunately, many see students as nothing more than dollar signs in backpacks," said Rohit Chopra, who is looking into the issue for the U.S. Consumer Financial Protection Bureau. "Too often these deals aren't what's in the best interest of students."
Federal officials are increasingly concerned about the burgeoning number of deals between banks and American universities, saying colleges eager for new streams of income may be short changing their students. A study by the Public Interest Research Group last year found that there are now 900 card partnerships between colleges and banks – agreements that could impact more than 9 million students nationwide.
Members of Congress and the Consumer Financial Protection Bureau told ABC News they are now examining hundreds of these agreements. In many cases, students and parents were never told that banks paid millions of dollars in exchange for exclusive campus access.
Bank officials may be staffing orientation sessions, printing T-shirts, and hosting welcoming parties. At a number of universities, banks have even gotten into the business of printing official student IDs, so the same card that gains a freshman access to the library can get him cash from the ATM.
"What we see here is that they've shopped for the best deal for the university, not for their students," said U.S. Rep. George Miller, the ranking Democrat on the House Education Committee.
Chopra said universities are "looking to make up revenues in creative ways."
"And one of those creative ways is marketing arrangements with financial institutions," he said.
Documents obtained by ABC News surrounding the multi-million-dollar deal between the University of Minnesota and TCF Bank provide a glimpse of how expansive the agreements have become. The Minneapolis-based bank is paying the University of Minnesota more than $1 million a year to help it recruit students as customers, even offering the school bonus payments of $34 for every student that takes a TCF Bank account.
A stroll around the bucolic Minneapolis campus shows what that money is buying. Incoming freshmen wear Gopher t-shirts with the bank logo on the back. On one side of the student center, across from restaurants and upstairs from the bowling alley, is a TCF Bank branch. On the other side of building is the office where student IDs, called "U Cards," are dispensed. Some of the staff on hand are actually TCF Bank employees, who encourage students to merge their IDs with a TCF Bank debit card, promising "no-fee," "virtually free" checking accounts. Students who agree to deposit more than $50 are told they will receive a free University of Minnesota sweatshirt.